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Thread: working out hourly rate

  1. #11
    Join Date
    Dec 2008
    Location
    Diamond Lake, WA
    Posts
    1,535

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    $1 per minute retail for cutting time. All other aspects of the job are $60/hour with a minimum of $30. I do offer some hourly rate diswcount for wholesale customers depending how long I've been working for them. If the job is big enough I will price in a bit or two. For large wholesale customers I do it by the job after figuring out how long it will take to cut a sheet. I give them a break off the $1 per minute run rate of the CNC. I have a spreadsheet that I can use to plug in different discount rate percentages depending on how large a run the customer will be doing. It's worth the time to put this spreadsheet together for larger jobs.
    Don
    Diamond Lake Custom Woodworks, LLC
    www.dlwoodworks.com
    ***********************************
    Life is not a journey to the grave with the intention of arriving safely in one pretty and well preserved piece; But to skid in broadside, thoroughly used up, worn out, bank accounts empty, credit cards maxed out, defiantly shouting "Geronimo"!

    If you make something idiot proof, all they do is create a better idiot.

  2. #12
    Join Date
    Feb 2017
    Posts
    5

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    Alan,
    Are interested in relocating for a full-time position?

  3. #13
    Join Date
    Apr 2007
    Location
    Marquette, MI
    Posts
    3,327

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    To Alan the OP...
    Until you get a good database of experience, it will be difficult to know all the variables, I guess near impossible. But if you keep good records you will start to get good with time.

    To your original question: In many cases the price may already be set and it will seldom be hourly. This has been discussed ad nauseum on this forum and others. Take this analogy:

    A 10 cuyd load of gravel is a fixed price. The gravel pit will load it for $10 in your truck/trailer. Takes a few minutes for a $100/hr loader. That's a buck a yard. Now consider a guy with a shovel, or a guy with a spoon. Should the guys with the small slower equipment be entitled to $100/hr? Same thing with CNC machines. In most cases an adjustment must be made. Take the Desktop vs a full sized Alpha. Should they both charge the same hourly rate? How about the job shop down the street that has a $300K big iron machine? How about a ten year experienced user vs. one with a month or two?

    If the guy with the big machine cuts 100 ping pong paddles an hour and charges a buck apiece, then cutting them is worth a buck. The Alpha may get 25-50 an hour the desktop only a dozen. Lesson is that you cannot set an arbitrary rate without a lot of information about the product and local conditions. You would be better off selling a product with machining included, or attaching a "value" for cutting than you would be to set an hourly rate.

    I can tell you that the range (looking back with good jobcost records) My machine would get between $.50 and $250 per hour, depending on how quickly I caught on to the variables associated with the job and how many mistakes I made (or didn't make)
    Gary Campbell
    CNC Training & Technology
    GCnC411(at)gmail(dot)com
    The Ultimate Woodworking Machine
    http://www.youtube.com/user/Islaww1


    "We can not solve our problems with the same level of thinking that created them"
    Albert Einstein


  4. #14
    Join Date
    Jun 2017
    Location
    Glendale, WI
    Posts
    57

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    I am about four months into trying to make a viable shop-based business with the CNC as the backbone of my efforts. Many have told me it's unlikely that I will be successful, and they may be right. Or wrong. Time will tell, and I honestly don't know yet. But it's an uphill climb for sure.

    Here are a few early lessons:

    1. As you are ramping your way up the learning curve, everything is MUCH MORE EXPENSIVE in dollars and time than you think it will be. I doubt you will find a consistent hourly rate, especially since the vast majority of people are going to want to pay by project/total cost and not hourly. You have to be prepared to stick out the expensive learning curve.

    2. There is serious downward pressure on your hourly rate and much of it is out of your control. If your market is direct to consumer for furniture or functional wooden items like trays, even if you can reach high end consumers you are still competing with mass production pricing models. My current example is a 48" ash bench that I designed and am making for a customer. The iconic Herman Miller platform bench is $1200 in maple, so that's likely the upper price boundary. My bench runs about $100 in material cost, not including overhead and consumables like electricity, sanding pads, bits etc or spray finishing costs. Let's just say I have $150-$200 in actual costs. Could be more. IF I can sell the bench in the future at a retail price of $700, then my time would be valued at $500-$550. That time includes customer communication, CAD and CAM tweaks to account for differences in wood size from job to job, trips to the lumber yard, production, sanding, assembly etc etc. To make $50/hour I have to do all of that in 11 hours as a one man shop. It's possible, especially if you are lucky enough to have multiple orders and the efficiencies that would afford. But it's also possible that it ends up taking longer.

    3. The kind of CNC person you want to be will have a big influence on your eventual hourly rate. Do you want to be a creative designer or are you happy to just crank out parts? The combination of CNC and CAD creates amazing and seemingly limitless possibilities. If you're like me, you might want to design and make really cool, complex stuff. And you can. But that might be better as a hobbyist, as I fear the real money is either in totally niche work and/or in relatively simple, repetitive work (by simple I mean simple for a CNC, but NOT simple for the human hand). Right now, in all seriousness, my design that might be the quickest path to a profitable product is a stupid little keychain cut in the shape of a particular lake out of 1/4" walnut. I can get a piece of 8" x 96" x 1/4" walnut for $19, sand it, chuck up a little 1/8" bit and let the machine crank away at 116 of them at a time while I work on something else in the shop. Then I can literally spray the entire piece of stock before removing the tabs with a table saw or bandsaw. Add a ring. Sell to the local gift shop for $4 each so they can sell at $7.99. Less than $50 in cost and maybe an hour of my actual time. $464 of revenue. That's a lot better than $50/hour. Repeat for the next lake market. But if all I do is make little walnut keychains, I might as well sell the bot...That's my problem. I didn't understand this before I bought a shopbot and signed a lease on a shop.

    I realize my thoughts might seem to have veered from your original question about hourly rate. But I think that question and these issues are necessarily intertwined. Good luck and keep sharing!

  5. #15
    Join Date
    Nov 2016
    Location
    New Mexico
    Posts
    35

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    We totally agree with bking1836 above...

    "There is serious downward pressure on your hourly rate and much of it is out of your control. If your market is direct to consumer for furniture or functional wooden items like trays, even if you can reach high end consumers you are still competing with mass production pricing models."

    That pretty much says it all.

    1. Downward pressure on hourly rate.
    2. Out of your control.
    3. Can you reach high-end consumers?
    4. Competing with mass production pricing models.

    I would add one more to that formula...

    5. The "Maker Revolution" all over America is a Force To Be Reckoned With.
    Dave B
    New Mexico
    Our most important shop tool is the pencil sharpener!

  6. #16
    Join Date
    Dec 2008
    Location
    Diamond Lake, WA
    Posts
    1,535

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    All these discussions make me realize that I might be choosing the right time to look at scaling back my cabinet/furniture shop and taking up semi-retirement.

    I don't have the money, ambition or energy to purchase a bunch of new high-tech machinery and hire operators so I can compete today. I'll have to say, it has been a great 52 years of traditional woodworking for me. I've enjoyed every second of every day I've been in the shop making sawdust. After all, a bad day in the shop is better than any day in an office (did that for a few years). All but 18 years of that were hobby woodworking. I will continue woodworking, but on a limited basis and doing only projects I want to do.

    I think I'm going to use my energy to try and help the current generation of high school kids before they are a write-off. After all, eating laundry detergent (or whatever the latest craze of stupidity is) can't be doing to much good for their brain cells. Kinda of like the kids from the 60's and 70's frying their brains on drugs.

    I've got about 6 months of orders to finish up, then I'm going to go kayaking, camping, hiking and 4-wheeling more.. WOOHOO!!!
    Don
    Diamond Lake Custom Woodworks, LLC
    www.dlwoodworks.com
    ***********************************
    Life is not a journey to the grave with the intention of arriving safely in one pretty and well preserved piece; But to skid in broadside, thoroughly used up, worn out, bank accounts empty, credit cards maxed out, defiantly shouting "Geronimo"!

    If you make something idiot proof, all they do is create a better idiot.

  7. #17
    Join Date
    Mar 2016
    Location
    Brooklet, Ga
    Posts
    174

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    I'm working on working out an hourly rate also with plastic parts-production I do from other people. $65-75/hour looks to be right where I need to be to be profitable going forward. I do alot of custom doorhangers and wooden signs which don't pay as good but I try to do them in batches to spread the cost over several items.
    My time is very valuable to me and my family. I do the Bot thing part-time and work as a healthcare professional full-time so I don't want to work all day and them come home and end up working 3-4 hours for $8/hour. It ain't worth it to me for that.
    2006 PRTalpha 96x48
    3hp SEV spindle
    Vcarve Pro8
    Always eager to consume large amounts of info, tips, and techniques!

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